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Tariff ruling drives US rise, market is waiting for US heavy data
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Hello everyone, today XM Foreign Exchange will bring you "[XM Group]: Tariff rulings drive the rise of the United States, and the market is waiting for the heavy data of the United States." Hope it will be helpful to you! The original content is as follows:
On Wednesday, the US dollar index hovered around 98.41, up 0.10% intraday. The dollar rebounded as investors' concerns about the government's fiscal situation intensified, with the pound and yen falling on Tuesday, and traders looked at Friday's U.S. jobs report to look for signals about the dollar's next move.
Analysis of major currencies
Dollar: As of press time, the US dollar index hovered around 98.41. Tuesday was affected by the surge in U.S. Treasury yields and the global financial market's reaction to "the US court ruled that most tariffs were unconstitutional during Trump's period", the US dollar index (DXY) rose sharply and broke through key technical positions. The index broke through the 50-day moving average at 98.000 (currently becoming a short-term support level), with a high of 98.5895 intraday.
1. Nearly 600 economists signed an open letter to support Cook's call for defending the independence of the Federal Reserve
Many well-known economists supported Fed Director Lisa Cook, after U.S. President Trump sought to fire her for suspected mortgage fraud. Nearly 600 economists signed an open letter to support Cook, saying that the threshold for removing Fed directors is high and elected officials should avoid words and deeds that erode the Fed's independence. The open letter was published Tuesday, with signers including Nobel Prize winners Claudia Golding and Paul Romer, Christina Romer, former chairman of the Obama administration’s economic advisory board, and Trevon Logan, a professor at Ohio State University and co-authored paper with Cook.
2. US media: The US Treasury Secretary will start a series of interviews with candidates for the Federal Reserve on Friday
According to the Wall Street Journal, citing people familiar with the matter, US Treasury Secretary Becent plans to conduct a series of intensive interviews with candidates for the Federal Reserve on Friday. Sources said the interview process will continue until next week, with Becent having face-to-face or video conferences with candidates. According to Besent and his advisers, there are currently 11 candidates shortlisted, including Fed governors Waller and Bowman, National Economic eouu.cnmission Director Hassett and former Fed governor Wash. After the interview, Becente will submit a final list of candidates to Trump. Becente had previously said he would start the selection of successors to the Federal Reserve Chairman shortly after Labor Day.
3. ECB Management eouu.cnmittee Mueller: Maintaining interest rates and observing the economy is a reasonable move.
ECB Management eouu.cnmittee Mueller said that the economy is showing resilience when inflation levels are close to the target and the economy is showingIn the scenario, the central bank is fully capable of keeping interest rates unchanged next week. The Estonian central bank governor said when asked about expectations that officials would keep borrowing costs unchanged on September 11 that this view is "logical" given that economic activity may gradually rebound. “The current rational approach is to take the time to monitor economic data released in succession in the eouu.cning months and make different decisions if necessary,” he said. The remarks show that the eouu.cnmission's willingness to further relax policies is weakening after eight rate cuts and the first suspension in July.
4. Market demand is strong. The UK will raise a record £14 billion by issuing 10-year treasury bonds.
The 10-year treasury bonds issued by the UK government have attracted huge subscriptions and are expected to raise a record £14 billion. The bond, which will expire in October 2035, attracted more than £140 billion in bids. Its pricing will be 8.25 basis points higher than the benchmark, with a face rate of 4.75%. Vanguard, one of the world's largest asset managers, said it has established a large number of positions in this transaction.
5. Eurozone inflation report supports the ECB continuing to suspend interest rate cuts this month.
Eurozone inflation accelerates beyond the ECB's target, consolidating expectations that officials will keep interest rates stable when they meet next week. The initial annualized CPI rate in the euro zone in August was 2.1%, slightly higher than the 2% in the previous month, in line with market expectations. The annual rate of core CPI is 2.3%. The price increase of services, which has been closely watched, fell back to 3.1%. The report will confirm the ECB's judgment: With the background that inflation trends and economic resilience are both in a controllable range, decision-makers can suspend interest rate cuts again at their September meeting, which will also help cope with the external pressure brought by the US's increased trade tariffs. Nomura Securities economist Josie Anderson said: "We believe that inflation will stabilize at around 2% for the rest of the year. We believe that the ECB will not cut interest rates again."
Institutional View
1. Rabobank: The recent rise in the euro has weakened the euro against the dollar and remained stable
Jane Foley, foreign exchange strategist at Rabobank, said that investors' holdings are a key factor in the recent stability of the euro against the dollar. The dollar has performed the worst this year, recording a monthly decline in August again, but the euro has basically shown a sideways consolidation trend against the US dollar in the past few months. Earlier this year, the market had established large long positions that were bullish on the euro due to optimism about Germany's fiscal spending plans. However, these fiscal plans may currently face reductions. As Germany's economic growth remains weak, the recent upward momentum of the euro has weakened.
2. Rabobank: The US dollar may have limited decline in the near future
Jane Foley, foreign exchange strategist at Rabobank, said that the room for the US dollar to fall further in the short term may be limited. The expectation of a US interest rate cut has been fully priced by the market, and the current market itself is betting on the weakening of the US dollar. Earlier this year, theThe dollar weakens in part because a large number of non-local asset management institutions in the United States have carried out risk aversion operations to hedge the risk of the US dollar's decline. If these adjustments are basically eouu.cnpleted, a major downward pressure faced by the US dollar will also weaken. Therefore, the pace of the subsequent decline of the US dollar should slow down, and there is room for a rebound in the next few months.
3. Dutch International: The reason for the ECB to remain silent is quite sufficient.
Economician Bert Clariant, a Dutch International Group, said in a report that the inflation rate in the euro zone has risen slightly to a target level of slightly higher than the ECB's 2%. Although the future prospects face many risks, this data confirms that the current inflation environment is generally stable. Given that interest rates are already at neutral levels, it is a logical decision to choose to pause interest rate cuts at this time. However, given the weak economic growth, the uncertainty of the future economy, and the general market expects the Federal Reserve to cut interest rates again, some European Central Bank policymakers may still push for another rate cut. But this possibility is relatively low, because the reason for maintaining interest rates is quite sufficient.
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